Competitive US wireless market? New FCC may give new answer

It has been a big week for mobile phone regulation, or at least discussion about it. On Monday a quartet of United States Senators sent the Federal Communications Commission a letter asking the agency to probe whether exclusivity deals between wireless handset makers and mobile services limit consumer choice. On Tuesday AT&T and Verizon defended the cost of text messaging, insisting that most consumers opt for affordable bulk texting plans.

And on Wednesday the Senate Commerce Committee held a hearing on the "consumer wireless experience," at which reform advocates continued to press for the unbundling of wireless services and handsets—basically letting consumers pick and choose wireless applications, as they do on wired networks, thanks to the FCC's Carterfone principle.

But behind the scenes, reform groups and the carriers are debating a broader problem: is the wireless industry competitive? Asking the question isn't just a good idea, it's the law. When Congress created the statutory category of Commercial Mobile Services in 1993, it told the FCC to submit an annual report on the quality of wireless service. The agency is now working on number fourteen. The latest report announced that there is "effective competition" in the market. The country had 263 million subscribers as of December 2007, it says—a penetration rate of about 86 percent.

"Mobile telephone service in the United States remains relatively inexpensive on a per minute basis compared with that in Western Europe and Japan," the survey concluded.

Decline to impose

This sort of talk is good news for carriers, because it allows them to argue that the competitive nature of wireless overall makes the services of an individual provider less of a issue. Consumers have choices, negating the need for regulation.

"To foster continued growth and innovation the wireless industry is asking the Commission to dismiss the pending Skype Petition seeking imposition of Carterfone-type regulations on CMRS providers;" argued CTIA - The Wireless Association in its latest comment on the survey, "to decline to impose net neutrality regulations with respect to content, application, or device access obligations on wireless broadband providers or to adopt a new non-discrimination principle."

That plea probably isn't going to receive as sympathetic an ear from Julius Genachowski's FCC as it did from Kevin Martin's. Example: interim FCC Chair Michael Copps' disclosure on Thursday that he wants the FCC to open up a proceeding on handset exclusivity.

And that's why mobile groups and reformers are rushing their comments to the agency in time for incorporation into the FCC's 14th survey. Two of those filings are a study in contrast—one coming from a sextet of advocacy groups, the other coming from CTIA. The Consumers Union, Free Press, Public Knowledge and three other non-profits argue that the FCC's 13th annual report skipped a lot of stuff when calculating competitiveness.

A "shallow analysis," they call the 13th survey. Here's some of what they say the FCC missed.

You didn't separate mobile voice from broadband

The reform filing argues that the FCC created a "distorted" picture of the level of competitiveness in wireless because it lumped voice and broadband services together. Sure, CU et al concede, they're often bundled to consumers. But mobile broadband is "disproportionately available to large incumbent carriers," e.g., AT&T and Verizon. They're the ones, after all, that don't have to negotiate for the special access services you need for backhaul. When you focus on the carriers who offer wireless broadband, it's a much less competitive market.

"A deeper evaluation of these services will indicate a higher degree of concentration and more obstacles to competition among providers of mobile data and mobile Internet access services as compared to mobile voice services," the filing warns.

Zero for conduct

The CU commentary also suggests that if you take a closer peek at carrier behavior rather than the number of carriers in a given market, you find similar pricing structures that suggest little actual competition. Forget minute-to-minute, most consumers pay over five hundred dollars a year for wireless access on average, "much more than users in most other developed nations." Most voice plans range around 29 to 39 a month. "Pay-as-you-go options remain costly for customers looking for economical solutions," the writers note.

The carriers haven't adequately explained their data plan pricing structures either, the services appearing to be "far removed from any possible cost." Why does AT&T effectively charge $480 for every gigabyte of data consumed above its 5GB a month plan, the groups ask—this famously delivering a $5,000 bill to an Oklahoma consumer.

And sure, bulk texting plans give consumers more options, but why do carriers still charge 20 cents an individual message (a reality that makes me reluctant to text friends who I know don't use the service very often)?

"Any revenue received by the provider on incremental text message usage is nearly pure profit," the commentary argues. "To put these profits in perspective: considering how little data is transferred in an SMS message, at 20 cents per message, consumers pay the equivalent of almost $1,500 per megabyte of data transferred, a rate over seventeen times more expensive than receiving data from the Hubble Space Telescope."

Glaring signs ignored

Then there's the oft-cited problem of device limits, among them Skype VoIP and SlingPlayer mobile not being allowed on AT&T's 3G network. "In the Fourteenth Report, the Commission should consider limitations on usage as provider conduct indicating a lack of effective competition," the groups write.

The filing cites many other practices that it sees as evidence of a lack of competitiveness: early termination fees, mandatory contract extensions that sometimes come with a new data plan, handset exclusivity arrangements between manufacturers and providers, and restrictions on roaming access for new market entrants.

"Past CMRS reports issued by the Commission have ignored many glaring signs of limits on effective competition, as well as numerous factors indicating that the wireless market will not dig itself out without regulatory intervention," CU and company charge.

On the other hand

But CTIA offers a very different perspective on the problem. All segments of the industry are "aggressively competitive," the trade group argues. "No one carrier holds a dominant share of the wireless market"—the biggest of the top four, AT&T, reaching 28.5 percent of subscribers. And these carriers are aggressively moving out new broadband services, as evinced by a dramatic growth in cell phone sites over the past eight years, almost double the number in 2001.

This has dramatic implications for the FCC's stated goal of getting beyond the broadband duopoly (telco, cable), and establishing a "third pipe" for consumers. "Although some have bemoaned the lack of a third pipe to the home, this concept has been overtaken by events," CTIA argues. "It ignores that many American communities have three, four, five, or more additional choices in the form of mobile wireless broadband competitors providing connectivity to the person."

It's not like CTIA wants the FCC to take a completely deregulatory approach to mobile regulation. The trade group wants access to more spectrum and "reasonable time periods" for tower applications. But beyond that, hands-off is the word.

While "certain groups" want the FCC to "consider price or network regulation of the wireless industry," CTIA says, "hopefully the Commission will look at the consumer performance of those industries that are regulated by agencies versus those—like the wireless industry—that are driven by their customers and competition."

Will the mobile industry get the same kind of thinking in the 14th CMRS survey that it praised in the last? It seems likely that the next FCC will heed at least some of the criticisms that consumer groups have offered on earlier reports. Then Congress and the agency itself will have to decide what actions to take, based on the Commission's latest assessment. The deadline for final comments on the annual survey is June 29.

Matthew Lasar
Matt writes for Ars Technica about media/technology history, intellectual property, the FCC, or the Internet in general. He teaches United States history and politics at the University of California at Santa Cruz. Emailmatthew.lasar@arstechnica.com//Twitter@matthewlasar

33 Reader Comments

Any revenue received by the provider on incremental text message usage is nearly pure profit," the commentary argues. "To put these profits in perspective: considering how little data is transferred in an SMS message, at 20 cents per message, consumers pay the equivalent of almost $1,500 per megabyte of data transferred, a rate over seventeen times more expensive than receiving data from the Hubble Space Telescope.

HA! I've been saying that for years, but this illustrates it FAR better than I ever did. Kudos to them. I just hope the FCC acts on the message.

I don't care if carriers charge for access. Hell, they can even do bandwidth and service tiers. But they need to stop this ridiculous protocol discrimination and gouging.

About time somebody puts those telecom companies in line... it's outrageous what they're able to get away with charging for their poor quality services due to the lack of any real competition or regulation.Good riddance.

Wait, what? No there's not. Last I checked, every carrier out there has limits on their so-called "unlimited" broadband offerings. In fact, most of 'em have even stopped bothering burying that fact in their T&C.

I'm on a contract with Sprint that predates the 5GB limit by a matter of months, and you better believe me I'll be canceling my contract if they even try to force that 5GB limit on me. Until they start charging REASONABLE overage charges, like $5/GB, there's no way I'm going to tolerate it. If I remember right, Sprint's current rate charges about $52.80/GB.

So, wireless providers strong arm consumers into buying text messaging plans with exorbitantly over-prices per-message rates - and then defend that by saying the cost of text messaging is reasonable because most consumers opt for text messaging plans. WTF??? I hope even a politician can see how absurd that logic is.

Originally posted by Blue Adept:I was wondering just recently why the Carterfone principle didn't apply to the US cell phone network.

Even if it did, it wouldn't make much of a difference. The technical differences between the networks (GSM/CDMA, frequency bands, etc) make it not practical or even possible.

You cant take an iPhone 3GS to Verizon or Sprint because of GSM v CDMA. You can take it to T-Mobile but you will only get EDGE data speeds because T-Mobile's 3G frequencies are in the AWS (2100/1700) band while AT&T uses GSM850/1900.

Even if it did, it wouldn't make much of a difference. The technical differences between the networks (GSM/CDMA, frequency bands, etc) make it not practical or even possible.

You cant take an iPhone 3GS to Verizon or Sprint because of GSM v CDMA. You can take it to T-Mobile but you will only get EDGE data speeds because T-Mobile's 3G frequencies are in the AWS (2100/1700) band while AT&T uses GSM850/1900.

But it should work on technologically-compatible networks. It goes both ways.

So AT&T and Apple should not aggressively lock their iPhones, and Verizon and Sprint should allow any device that satisfies the requirements to hop onto the network.

Yeah, sure, I've got 4 wireless "broadband" options here. Three of them (Sprint, Verizon, and AT&T) all run the exact same absurdly high price of $60/month and all have the same equally absurd 5GB/month data limit. Then there's a 4th, Cricket, which has terrible coverage but only charges $50/month. All 4 offer the super fast speed that occasionally approaches what I could get with the slowest DSL connection from AT&T (also the only DSL provider in the area).

American wireless consumers have two choices: Take it (up the backside, with a healthy helping of sand in the Preparation H), or leave it. It's long past time that the formerly Industrialist-dominated FCC begins to serve the people whose taxes pay their salaries, and force *real* competition in the marketplace. For example, in Europe, inside one's "home" network, only outgoing calls and SMS messages cost the user; they are not charged for incoming calls and text messages (which is fair, after all, because the receiving user frequently can't tell who's calling or texting until *after* accepting the connection).

Originally posted by Old Man Dotes:American wireless consumers have two choices: Take it (up the backside, with a healthy helping of sand in the Preparation H), or leave it. It's long past time that the formerly Industrialist-dominated FCC begins to serve the people whose taxes pay their salaries, and force *real* competition in the marketplace. For example, in Europe, inside one's "home" network, only outgoing calls and SMS messages cost the user; they are not charged for incoming calls and text messages (which is fair, after all, because the receiving user frequently can't tell who's calling or texting until *after* accepting the connection).

I don't mind being charged for incoming calls. If caller ID doesn't show up, I can choose not to answer and they can leave a message if it's a valid call.

Being charged for incoming text is asinine though. My cell phone bill doubled last month because a new friend sent me a lot of texts. I've had the same plan for 8-9 years and have never gone over until last month. One person starts texting me a lot (but not that much), I go over the limit, and my bill doubles? That's just crazy. Thankfully, I got a friendly AT&T operator who reversed the charges and retroactively put me on a higher tiered plan, which isn't cheap btw. The texting charges are completely out of control.

Even sitting here just to the left of Lenin as I am, I have a hard time seeing how FCC regulations can reasonably affect how cell providers price services.

People are willing to shell out $35/mo for 5GB of mobile data, or $20 for unlimited texting, or or $40/mo for 300 minutes of talk time, or, for that matter, $150/mo for cable TV, so who's at fault? We complain about expensive gas, expensive cell plans, etc., but then turn around and buy more of the stuff than ever.

On the other hand, what if we legislate neutral networks across all types of data connections (radio, fiber, coax, etc), and to force the businesses that offer content (voice or voip service, text messages or IM, TV shows), to break apart from the businesses that own and charge access the pipes. That would level the playing field and open up competition like crazy. It would also make the dtv transition look like a fuggin cakewalk.

While "certain groups" want the FCC to "consider price or network regulation of the wireless industry," CTIA says, "hopefully the Commission will look at the consumer performance of those industries that are regulated by agencies versus those—like the wireless industry—that are driven by their customers and competition."

Hey, that's a great idea. Let's measure "consumer performance". Raise your hand if you hate your wireless provider with a passion that borders on psychotic. Hmm, I see about 99% of hands raised. Okay, raise your hand if you have ever heard anyone you know say anything positive about their wireless provider. Really, no one?

Now we just need a cadre of PhD's to tell us how to interpret that data.

Originally posted by Arty50:Thankfully, I got a friendly AT&T operator who reversed the charges and retroactively put me on a higher tiered plan, which isn't cheap btw. The texting charges are completely out of control.

That was very generous of them. You say they forgave the charges, and all you had to do was pay more money? How nice!

Let us not forget that these companies exist because we the people choose to license part of a public resource (radio spectrum) to them, and we punish anyone else who tries to use those frequencies, guaranteeing the space is clean.

Same as the ILECs and cable cos exist because we voluntarily let them have the right to put up telephone poles or put cables in the ground. In most cases we also granted them a monopoly over a large territory to sweeten the deal.

These companies aren't selling widgets; they rely on public support for their existence. That support can be altered or withdrawn at any time, and should be if they refuse to play ball.

Hey, that's a great idea. Let's measure "consumer performance". Raise your hand if you hate your wireless provider with a passion that borders on psychotic. Hmm, I see about 99% of hands raised. Okay, raise your hand if you have ever heard anyone you know say anything positive about their wireless provider. Really, no one?

Yes exactly! The customer satisfaction with these companies is so low, they cannot possibly be in business unless they are monopolies. This is true in other industries as well, but probably none quite so badly as telcos.

Originally posted by flat otter:On the other hand, what if we legislate neutral networks across all types of data connections (radio, fiber, coax, etc), and to force the businesses that offer content (voice or voip service, text messages or IM, TV shows), to break apart from the businesses that own and charge access the pipes. That would level the playing field and open up competition like crazy. It would also make the dtv transition look like a fuggin cakewalk.

This is actually a great idea. One company is the wholesale provide or the dumb pipe to the internet. This company doesn't care what is going down the pipe all they care is that they company that lease the space on it pay's them. This way it doesn't matter what is going down the pipe as long as the bandwidth gets paid. This would allow small starts up provide nitch acess to clients and with out having to worry about the cable co cutting off services cause they "conflict" with services they offer.

Originally posted by Arty50:Being charged for incoming text is asinine though. My cell phone bill doubled last month because a new friend sent me a lot of texts. I've had the same plan for 8-9 years and have never gone over until last month. One person starts texting me a lot (but not that much), I go over the limit, and my bill doubles? That's just crazy. Thankfully, I got a friendly AT&T operator who reversed the charges and retroactively put me on a higher tiered plan, which isn't cheap btw. The texting charges are completely out of control.

How many months is it going to take you (at the new higher price) to cover the difference in plans? ANd what if your friend cuts back before then - they won't let you drop to a lower texting plan until the next time to renew your contact...

Assuming you are on one of the big 4, what you just said about text plans is incorrect. I know because I manage a store for one of the big 2 and have worked for the other company as well.

Text plans are put on accounts as features...like voicemail, etc. You can change the feature, take it off, add it back on, pretty much at will. You can do the same with rate plans now and it will not lengthen your contract.

Do I think that data and text plans are abnormally expensive, yes. Do I think that many people whine about any and everything that happens on their cell phones...alot of the time. I have had service when I worked for a cell company and when I have not. I am not loyal to any of them, including the one I work for....I am there to do a job and sell a decent product that does work.

The issues that everyone seems to have is that they feel that the service should work every single time without any hiccups, no matter the terrain, hills, being inside 20 feet of concrete in a building, etc. Everyone forgets that they are using a handheld radio for lack of a better term (that is essentially how cell phones work, on the radio spectrum). And they forget that that radio is < 1/2 a watt in power. I get bad radio signals all the time from stations that pump out huge amounts of power....things affect it. Same thing with cell phones. They are not perfect, they drop calls for a variety of reasons...see some of the examples above. Radio signals do not penetrate thick concrete walls very well. Only so many towers can be put up based on all sorts of regulations and God forbid we actually have to see a tower near our neighborhood.

The fact is that we forget that it is a technology, like a computer, like a car....they all have issues from time to time and are not perfect. The cell phone is a tool that we use, not a prefect device that "magically" works everywhere all the time.

I know that service contracts suck...but you don't have to pay $200+ for a phone either (and yes, the iphones DO cost the carrier a ton of money...I see the invoice). Apple makes money on the equipment and then everyone forgets that they take a portion of the monthly service fee as well. You sign a contract because we WON'T pay that much for a phone. Ok, so you need to remember to keep your end of the bargain up....you don't get a new SUBSIDIZED phone until you finish the contract you signed to get the last one. Actually that is not true, the big carriers do let you get a new discounted phone typically 80% through your contract. So, no, you do not deserve a new iphone (or whatever) that you have had only 8 months (ie the company has not even recovered the subsidy they LOANED you to get the phone at a reasonable price yet).

Really, as long as you treat a phone reasonably it will last you without breaking in most cases. If you change your habits (talk time, texting, whatever), just go into the store and get one of the reps to help you fix the situation....we do rerates ALL the time and are constantly trying to help you save money when we see the bill too high...why because the reps like to have your business and we DO try to provide good customer service. The issue comes in when people think they are owed something because they pay their bill. In actuality, you pay your bill for a service, be it x amount of minutes, free this and that. What if I expected the cable company to give me a new LCD tv because I was a customer for X amount of years and pay my bill on time (well pay on time most of the time)?? How fair is that??

Just trying to point out some of the ridiculous notions we have attached to cell service. We don't do this to most other businesses. If you have an issue that is reasonable and that can be corrected, I can tell you, the cell phone companies spend alot of time and effort training the people at cust ser and more so in the stores to help you....the customer.

Just my 2 cents since I have been and am still on both sides of this equation.

Originally posted by vrrll: ... If you change your habits (talk time, texting, whatever), just go into the store and get one of the reps to help you fix the situation....we do rerates ALL the time and are constantly trying to help you save money when we see the bill too high...why because the reps like to have your business and we DO try to provide good customer service. ...

I've had my 450-minute ($39) ATT plan for several years. Don't use the phone very much though, but moreso than a pay-as-you-go plan would be good for. Really, everything about the 450-minute ($39) works for me except the minutes and the money. So could I come into your store, show you my call history and get my bill changed to say, half? Are these secret powers not advertised on att.com?

I'm long out of contract, so why do I stay? Because it "still works" for me but I'd never call it a bargain. Many people I might call or that might call me are on ATT. This is what's called "getting you coming and going."

You see, each month I LOSE rollover minutes. I'm never gonna use them. ATT clearly knows I'm not getting my $39 worth, and yet they've never contacted me and said, "You know, you're wasting money. You should either talk more or we should charge you less." The former is implied; the latter an apparent impossibility for which they of course have no incentive, except of course that I'm out of contract and you'd THINK they would invest a 5-minute call in my direction if they had something to offer.

I like ATT as a service and the coverage is good for most areas I'm in. We splurged a few years ago and got my wife a 2G iPhone. I'd love no other phone than an iPhone for myself as well, but won't be getting one because the service pricing is just nuts. And texting costs more on a 3G than a 2G phone. Please --- defend that if you can.

You went off on a tangent than many of us already understand --- working retail can really suck sometimes, and customers are sometimes idiots. Point taken. The article here is how legitimate competition in the U.S is stifled, which has the effect of hurting consumers. Understand that.

I think it's important to seperate the two issues at play here: consumer protection and competitiveness.

Seems to me that the points mentioned in the article (plus personal experience) convincingly demonstrate that cell phone service is a competitive market. There are several companies genuinely trying to win over customers by offering the prices and services that attract them.

Of course if we were all rational agents a competitive market would be an efficient one. Unfortunately when it comes to issues like SMS pricing, data plans etc.. we simply don't behave so rationally. We are lured by low basic prices and fancy gadgets rather than the long term implications of the contract.

In fact far from encouraging desirable behavior competition can drive companies to raise hidden fees and charges. Maybe we need regulation for this but it's not about competition.

Originally posted by Old Man Dotes:For example, in Europe, inside one's "home" network, only outgoing calls and SMS messages cost the user; they are not charged for incoming calls and text messages.

I hear this argument about how incoming calls should be free because that's how they do it in Europe. However, these people forget that in Europe, the initiator get charged more to call a mobile phone than they do a regular phone. That's why Europe has separate area codes for mobile phones so it is easy to identify when you are going to pay more to call somebody. I personally like the US system of all numbers cost the same to call, especially because you can choose whether or not to answer a call on your mobile phone.

Doesn't anyone remember back when it cost a ton of money just to use a regular cell phone? I think not. As data on cellphones become more prevalent, the costs will come down. America is a unique challenge for cellphone providers in that it has multiple dense population centers all across the county, and the rest of the country is only lightly occupied. Even the population centers that are dense by American standard aren't really that dense by international standards. This means that when a new technology is rolled out, we have to upgrade many more towers than Europe and Korea do to reach the same number of people. I know this is hard for people at Ars to believe, but hardware matters more than software. If we had the same population dynamics as Korea, Japan, and Europe, we'd probably have the same broadband penetration. I'd wager we'd have even better coverage than Europe, but not as good as Korea or Japan.

As for the person that said that they get charged $20 for unlimited texting, well, DON'T PAY $20 FOR IT. Or switch carriers to someone that doesn't want to rape you. Ta-freaking-da. You're not entitled to everything you want. After all, we have the marvelous invention called e-mail nowadays that does the same thing as texting, but all you need is a free Wi-Fi connection!

The problem lies on a few areas. The exclusivity contracts are one thing. But how long should they be exclusive? The iPhone exclusivity is ridonkulous. And why can't we regulate that if you introduce a new phone, a minimum of two different carriers in the market to help foster competition? I think it would help everyone out if we all had more than one phone, one carrier. That nonsense just needs to stop.

Second, considering that European, Japanese and South Korean networks are more advanced than American networks, we have our work cut out. Don't kid yourself. We're using a cheaper technology to gain the broad coverage we enjoy, but compared to those foreign networks, our hodgepodge of networks is crap. If you just look at Japanese and South Korean phones, they make the iPhone look like a toy. Look at the data speeds of broadband in those countries. Our runs like a dog compared to theirs. America can and should do better in this arena.

What bothers me is the fact that these so called "unlimited plans" vary in price by almost 45 to 60 dollars per carrier? Really? Using such cheap technology, its that expensive between Sprint and other carriers? I want to call BS on that. If anything the CEO's here and their top execs could take a paycut and help lower the overall costs even further. I get so sick of execs saying they have to raise prices like they have been with the iPhone plans for new features or features they can't support from the start. If they didn't make so much more than their foreign counterparts, maybe AT&T would have a competent network capable of MMS and tethering services.

As for the person that said that they get charged $20 for unlimited texting, well, DON'T PAY $20 FOR IT. Or switch carriers to someone that doesn't want to rape you. Ta-freaking-da. You're not entitled to everything you want. After all, we have the marvelous invention called e-mail nowadays that does the same thing as texting, but all you need is a free Wi-Fi connection!

Well:

1) It's not a Free market. The FCC decides who, when, and were companies are allowed to use the radio frequencies. And the major considuration that the FCC uses in determining who is allowed monopoly rights over certain frequencies is by a bidding process.

If it was a open market on who can use the celular frequencies then what your saying would make much sense. But due to massive government regulation regular capitolistic competitive forces that keep corporations regulated do not apply to discussions about cellular phone companies.

In other words; Government enforced monopolies over the radio spectrum negate most positive capitalistic effects.

==========

2) The sideband channels that SMS messages used must be maintained by the cell phone companies due to the nature of cellular networks regardless of weither anybody is using them.

That is to say the cost of a SMS for cell phone companies is much less then typically imagined or the cell phone companies claim it to be. SMS is very close to being free as far as cell phone companies are concerned. They would have to maintain the same level of network even if they had zero SMS subscribers.

I am not sure of the details here, though. I am not a expert in Cell protocols, but it is my understanding of the situation.

==============

3) Email on cell phones are relatively rare.

Unless the person you communicating with has a 'Smart Phone' then it's very very unlikely that email will work out remotely well.

And, in fact, email support is pretty much shit on most cell phones anyways. That is it takes much longer for most smart phones + ISPs to recognize new emails then new text mails.

For example in my personal life I cannot communicate using email-on-phone with:1. My parents2. My sister, brothers, and the rest of my family.3. The majority of my freinds4. The majority of people I work with.

Why?

Becuase the majority of them do not have data plans and the majority of them do not have cell phones really capable of email even if they did.

SMS message, at 20 cents per message, consumers pay the equivalent of almost $1,500 per megabyte of data transferred, a rate over seventeen times more expensive than receiving data from the Hubble Space Telescope."

...well sirs it isn't the fact of a text message,or the cost of transmission form Hubble.Its the fact that "it is a picture from Hubble that is considered at all."

Originally posted by Old Man Dotes:For example, in Europe, inside one's "home" network, only outgoing calls and SMS messages cost the user; they are not charged for incoming calls and text messages.

I hear this argument about how incoming calls should be free because that's how they do it in Europe. However, these people forget that in Europe, the initiator get charged more to call a mobile phone than they do a regular phone. That's why Europe has separate area codes for mobile phones so it is easy to identify when you are going to pay more to call somebody. I personally like the US system of all numbers cost the same to call, especially because you can choose whether or not to answer a call on your mobile phone.

This is patently false. I'm in Egypt right now and pay only for outgoing calls and texts. It costs MORE to call landlines than cellphones (less than 7 cents a minute for cell calls and about 9 cents for landlines, this on a pay as you go plan). The major companies here are branches of UK companies (Vodafone and Orange), so I assume Europe is not much different. A quick check on Vodafone UK shows that there is no difference between landline and cell calls for pay as you go (for contracts there is after you run out of minutes, but it is not double). You obviously don't know what you are talking about.

If you look at the contract plans for Vodafone UK, you see how much we get screwed in the US. A contract for 10 pounds ($16.5) a month gets you a free phone and 100 minutes + 500 texts a month, with incoming free. We have nothing remotely comparable to that in the US amongst the big 4.

I'm coming back in a few days and am really not looking forward to getting jacked up again on cell phone plans, but don't have much an alternative. Pay as you go is terrible in the US, and the contracts are designed to always make you overpay.

I am sure your intentions are good, but I think you've bought into the company line too much, and might benefit from stepping back from the situation. Consumers would benefit substantially from simplified plans that don't have gotcha-fees that suddenly kick in at magic lines. What should happen is that consumers would get pay-as-you-go plans that charge a flat rate to power the towers + 10c per minute (or whatever) for talk time and 10c per MB (or whatever) of data. Phones should cost what phone providers want to charge for them and shouldn't be tied to plans.

In the current system, the charges have no relation to the actual costs. SMS costs are an extreme example, but the notion of all you can eat data is another in the opposite direction. It is completely obvious to anyone that over-the-air bandwidth is not an infinitely abundant quantity. All you can eat plans do nothing but encourage excessive usage.

Consumers are completely used to paying bills by the kw hour or cgal. That is the model the telcos should use. Paying by the minute and MB would be natural to consumers. There would not be conflicting signals to consume with wanton abandon "because you paid for it" except when you hit the magic line and then get slammed with overage charges. The current situation is just predatory. The cell industry should smarten up or find themselves on the other side of some heavy handed regulation, like the credit card companies -- another industry rife with predatory practice.

"It is completely obvious to anyone that over-the-air bandwidth is not an infinitely abundant quantity. All you can eat plans do nothing but encourage excessive usage."

That's funny, because as far as I know all you can eat plans are plentifully abundant outside of the United States, without hidden caps. People even use them to completely replace their wireline connections.

Korean cell phones have had the ability to stream video programs over the internet for several years already.

Your silly complaints remind me of people's corporate-apologizing attitudes towards satellite internet companies. Of course a quick google search will find a Japanese government-backed program that helped satellite companies launch a satellite internet service capable of fiber internet speeds, and this was in February of *last year*.

They charge up to 6000% more than the actual cost of sending a text just to force people into buying texting plans. They know most people will buy a bigger plan than they think they will use (otherwise you end up right back where you started, paying 20c per text on overages). And that means more money in their pockets. This time for something you DIDN'T use. And to make things worse, they then get together and price-fix together!I refuse to bow to this kind of manipulation and instead opted for a StraightTalk prepaid plan from Tracfone, where texting costs 1c each and talk is 2c a minute. Much better!